PAUL HARRIS REPORTS HIGHER FOURTH QUARTER EARNINGS AS STRONG HOLIDAY SALES BALANCE WEATHER-IMPACTED JANUARY
Outlook is for Improving Margins, Leaner Inventories, New Store Openings in 1996
INDIANAPOLIS, March 11 /PRNewswire/ -- Paul Harris Stores, Inc. (Nasdaq: PAUH), a specialty retailer of private-label women's casual wear, today announced strong fourth quarter results. Significant achievements for the year include reduction in per-store inventories, a lower debt-to-equity ratio, and improved operating efficiencies. The company anticipates that further gains from existing and new locations, continued closing of unprofitable locations, and improved merchandising will all contribute to growth in 1996.
Fourth quarter 1995 earnings were $4.24 million or $0.42 per share, compared with $4.08 million or $0.41 per share (including a $0.03 per share gain as a result of a pension adjustment) a year ago. Sales for the fourth quarter (14 weeks) ended February 3, 1996, were $59.3 million compared with fourth quarter 1994 sales (13 weeks) of $58.7 million. Comparable store sales declined three percent for the quarter.
For the 53-week year ended February 3, 1996, the company earned $1.63 million or $0.16 per share compared with 1994 52-week earnings of $3.08 million or $0.31 per share. Sales were $167.52 million in 1995, compared with $167.78 million in 1994. Comparable store sales were down seven percent for the year.
"In the face of a challenging retail climate and dismal January weather that held down sales, our strong fourth quarter performance was particularly encouraging," said Charlotte G. Fischer, Chairman, President and CEO. "Our holiday sales were very strong, demonstrating that we have loyal customers who have made Paul Harris their store of choice."
Focus on Core Business
During 1995, Paul Harris focused on strengthening its core concept, which is moderately-priced, color-coordinated women's casual wear, with matching accent pieces such as embroidered vests and accessories. While Paul Harris customers range from their twenties to late fifties, the core customer is 25 to 40 years old, seeking classic-looking casual wear that's easy to mix and match. Paul Harris locations sell only Paul Harris Design private label clothing.
Until recently, the company had operated a number of $5 to $20 stores. In 1995, the company closed 13 of these stores and converted another 15 to Paul Harris locations. Ms. Fischer says the company plans to eventually close or convert all remaining $5-$20 locations. "It was clear these stores no longer fit our new marketing strategy, and they distract from our focus on our Paul Harris business," noted Ms. Fischer.
With the goal of enhancing its strong Midwestern presence, the company plans to close approximately 10 to 15 unprofitable locations, and open a similar number of new Paul Harris stores, primarily in top Midwestern malls. The company says it also plans to continue its expansion of Paul Harris Direct locations in major factory outlet centers. "Paul Harris Direct will give us the opportunity to introduce the Paul Harris concept and branded merchandise to people who like to shop at outlet centers, but less frequently visit malls," explained Ms. Fischer. "We see an opportunity to run a profitable operation and build our customer base through this growing distribution channel."
During 1995, the company also introduced new customer service programs, such as: increased retail employee training; a "no-questions- asked" return policy, and; a toll-free hotline telephone number that enables customers to leave a message for the chairman. With the goal of increasing per-customer sales, the company will continue to heavily promote its Paul Harris Fashion credit card. The number of cardholders more than doubled for the year, and per-customer sales by users of the card is 89 percent higher than for other Paul Harris customers.
The company, under new management, reduced expenses and improved operating efficiency in 1995. Per-store inventories declined 8.3 percent year-to-year, or approximately $1.92 million. Inventory turns increased from 2.7 to 2.8, and the company anticipates further improvement during 1996.
During 1995, Paul Harris paid off approximately $4.3 million of its Chapter 11 debt and its long-term debt-to-equity ratio decreased from 1.10:1 to .77:1. Sales, general and administrative costs on a per-store basis declined 4 percent in 1995. Corporate overhead decreased $371,000 compared with 1994. Interest expense, net declined by $505,000 in 1995. The company noted that operating efficiencies resulted in available cash of $2.96 million in 1995 before debt repayments, and shareholders' equity increased 15.2 percent.
"We see many opportunities to continue cutting expenses in areas such as per-unit freight costs, which declined 24 percent during 1995 as the result of stringent controls and negotiating better contract terms," explained Ms. Fischer.
Store upgrades are also planned for several locations to maximize retail display space and create a more inviting atmosphere for customers, said Ms. Fischer. Upgrades will include larger dressing rooms, seating areas, moveable racking systems that make it easier to rotate merchandise, new lighting systems, and improved general appearance. A number of these changes are being made in response to ongoing customer surveys.
"We expect the challenging climate for retailers to continue in 1996," said Ms. Fischer. "However, we will continue to pursue further operating efficiencies and lower-cost purchasing, and to focus our growth in profitable, proven markets."
She noted that unexpectedly harsh weather during the 1996 holiday season or a severe economic down-turn could negatively impact earnings, but that overall, management is confident about the company's prospects. "We proved in 1995 that we can thrive in a difficult retail environment, and that our core concept is a successful one," added Ms. Fischer. "We believe this positions us to continue improving our performance in 1996."
Paul Harris Stores, Inc. is a specialty retailer of women's clothes, selling the Paul Harris Design and Pasta private label brands. Paul Harris offers a unique color-coordinated selection of casual clothing, accent pieces such as embroidered vests, and accessories. The company's stock trades on the Nasdaq market system under the symbol PAUH.
PAUL HARRIS STORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share and store data) For the For the For the For the fourteen thirteen fifty-three fifty-two weeks weeks weeks weeks ended ended ended ended Feb. 3, Jan. 28, Feb. 3, Jan. 28, 1996 1995 1996 1995 Sales $59,332 $58,696 $167,523 $167,778
Cost of sales including
depreciation 37,641 37,460 112,297 111,397 Gross income 21,691 21,236 55,226 56,381
Selling, general, and
administrative expenses 13,507 13,366 47,081 45,539
amortization 833 711 3,472 3,330 Interest expense net 451 576 2,034 2,539 Income before taxes 6,900 6,583 2,639 4,973 Tax provision 2,664 2,508 1,010 1,895 Net income $ 4,236 $ 4,075 $ 1,629 $ 3,078
Net income per
common share $ 0.42 $ 0.41 $ 0.16 $ 0.31
number of shares
and share equivalents
outstanding 10,145 9,998 10,067 9,981
Stores at the end
of period 235 239 235 239 PAUL HARRIS STORES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands) February 3, 1996 January 28, 1995
Cash and cash equivalents $19,886 $21,349 Merchandise inventories 17,645 19,567 Other receivables 539 949 Prepaid expenses 1,013 1,016 Total current assets 39,083 42,881
Property, fixtures and equipment
Land, building and improvements 5,715 5,693 Store fixtures and equipment 11,575 10,617 Leasehold improvements and other 11,389 10,524 Total 28,679 26,834
Less accumulated depreciation
and amortization (10,785) (7,507)
Property, fixtures and
equipment, net 17,894 19,327 Other assets 873 1,246 Total $57,850 $63,454
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 6,012 7,607 Compensation and related taxes 778 1,382 Income taxes payable 45 416 Other accrued expenses 3,447 4,710
Current maturities of
long-term debt 4,320 4,320 Total current liabilities 14,602 18,435 Long-term debt 17,640 21,970 Other non-current liabilities 2,704 3,159 Total shareholders' equity 22,904 19,890 Total $57,850 $63,454 -0- 3/11/96
/CONTACT: John H. Boyers of Paul Harris Stores, Inc., 317-298-6711; or Tad Gage, General Information, 312-640-6745, Bill Schmidle, Analyst Contact, 312-640-6753, or Laura Kuhlmann-Doerer, Media Contact, 312-640-6727, all of The Financial Relations Board/
CO: Paul Harris Stores, Inc. ST: Indiana IN: REA SU: ERN
BG-CS -- CLM003 -- 0604 03/11/96 08:33 EST
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|Date:||Mar 11, 1996|
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